In 2014, Americans reacted with outrage to reports that personnel at Veterans Health Administration (VA) medical centers had schemed to feign compliance with targeted waiting times for appointments. Whistle-blowers outed miscreants, alleging that clinical delays had caused scores of avoidable deaths. Political leaders blamed bad actors — and each other. Investigations led to firings — and congressional fury that not enough heads were rolling. The prevailing narrative was one of breakdowns of character and culture: dishonesty, callousness, and ineptitude.

Several years earlier, a similar scenario played out in Britain’s National Health Service (NHS), which had set waiting-time and quality-of-care targets that many facilities struggled to meet. The struggles of one facility, in the county of Staffordshire, became a scandal.

When, in 2008, an inquiry was opened into elevated mortality rates at Mid-Staffordshire’s main hospital, its chief executive ascribed these numbers to a coding glitch. But patients, family members, and physicians told horror stories of neglect. Over the next 5 years, investigations showed pervasive clinical lapses and gaming of systems to meet targets at this and other NHS hospitals. As with the VA scandal, politicians blamed individual perpetrators and one another, and the prevailing narrative highlighted lapses of character and culture.

But closer scrutiny reveals another parallel, with important implications for cost-control efforts. In both cases, performance standards often proved incompatible with resource constraints. Yet the gap between the two remained unmentionable amid pressure to make care both better and cheaper. Outbreaks of dishonesty resulted, as personnel tried to finesse failures with fakery. The fakery was discovered, and perpetrators were punished. But the truth that trade-offs between quality and cost were embedded in budget constraints remained submerged.

The gap between the care the United States promises veterans and the care it provides dates back a century: complaints about clinical overcrowding and corruption beset the Bureau of War Risk, the VA’s predecessor, from its beginning.1 Ousters and reorganizations were repeatedly followed by new revelations of shortages, neglect, and duplicity. The most recent cycle of revelation and outrage peaked in April 2014, when CNN reported that the Phoenix VA had shunted more than 1400 sick patients to an off-the-books list to hide failures to meet wait-time targets. Some patients had died without seeing a doctor. Others were put on the official list only when appointments could be scheduled within the 14-day-maximum wait time.

Anger over this deception dominated the public response. But inquiries by the VA inspector general (IG)2 and the White House3 showed large gaps between demand and clinical capacity. Wait-time targets failed to account for shortages of specialists, clinic space, and other resources, investigators concluded. Better administrative practice couldn’t fully bridge these gaps.

The IG found similar problems at many VA facilities. By August 2014, a total of 93 sites were under investigation for allegedly manipulating wait times.2 Congress quieted the outrage by giving the VA $16.3 billion to hire more clinicians and pay for private care as a stopgap. But it neither offered a long-term plan to align resources with demand nor conceded the need to weigh therapeutic benefit against costs.

Meanwhile, the British government adopted market-style reforms meant to reward frugality. Local health care networks were invited to bear risk, as “Foundation Trusts,” in return for enhanced autonomy and a share of savings. Waiting-time and other performance targets were introduced. Mid-Staffordshire’s leaders aggressively pursued Foundation Trust status, pressing clinical managers to slash spending to meet approval standards.

A government-commissioned inquiry by Sir Robert Francis revealed how these circumstances combined to create a major health care scandal.4 Francis’s report describes how Mid-Staffordshire’s leaders imposed cuts without assessing risks, then intimidated staff into suppressing their concerns. Overwhelmed clinicians, Francis concluded, couldn’t remain conscientious and still keep up. Receptionists performed emergency department triage. Meals were left out of reach of bedridden patients. Drug doses were missed. Incontinent patients weren’t cleaned. And impossibility engendered emotional disconnection. One physician told Francis, “What happens is you become immune to the sound of pain” — or “you walk away. You cannot . . . continue to want to do the best you possibly can when the system says no to you.”

Meanwhile, management insisted that NHS performance targets be met, punishing breaches even when compliance did more harm than good. Emergency department nurses told of delaying the start of antibiotics, pain medication, and other needed treatment to attend to less-needy patients within the 4-hour wait-time limit. Staff who missed targets feared being fired. This fear, Francis found, led to premature discharges and falsification of records.

Francis’s investigation showed how failure to address conflict between pursuit of quality and thrift begets frustration, neglect, and worse. Both scandals, moreover, spotlight the limits of deceit. Outraged caregivers, patients, and family members exposed gamesmanship and maltreatment. Impossible expectations led to abuses that proved impossible to hide.

“There’s a defined pot of money,” Francis told me last year. “But there’s a public expectation — there’s also a professional expectation — I should be allowed to do everything that’s in my patient’s interest . . . . Politicians promise the same. When that doesn’t work, it’s the fault of the [institution’s] leadership.” The result is a “toxic atmosphere” that “prevents those who are running the show from telling the truth” — and signals caregivers to keep quiet.

This analysis doesn’t let clinicians off the hook for dishonesty or neglect. But it underscores that these scandals are sentinel events — indicators of the risk that caregivers will move from frustration to insensitivity to corruption when put in an impossible bind between demands for frugality and demands for excellence.

Some institutions do better than others at achieving thrift while limiting ill effects. Identifying management practices that maximize clinical value within budget constraints is a vital policy priority. But management methods are blunt tools. They leave room for gaming. They encounter “bounded rationality” — psychologists’ term for people’s finite abilities to understand and respond to complex reward-and-sanction schemes. Rules and incentives, moreover, often corrode intrinsic motivation to avoid shirking and self-dealing.

Cost–quality trade-offs pervade medicine. Studies of the relationship between cost and clinical outcomes at many hospitals, including VA facilities,5 show correlations between higher spending and better results, especially when spending variation arises from different levels of care. The myth that we can control costs without forgoing therapeutic benefit is belied by mounting evidence.

As cost pressures build, failure to admit the need for trade-offs will make scandals more likely. Yet we’ve not begun a public discussion about how to make them. Policymakers keep silent lest they be accused of “rationing.” Professional leaders prefer to cast quality and cost reduction as complementary. They often are, as the Institute for Healthcare Improvement’s Triple Aim initiative has shown. But when they’re not, clinicians find themselves in a trackless wood.

Accountable care organizations (ACOs) are a case in point. Medicare’s Shared Savings Program, which rewards ACO physicians financially for restraining spending, claims both quality improvement and cost control as goals, but the latter is its main aim. Rewards are reduced for subpar scores on 25 clinical quality targets, but high scores yield no payoff without financial savings. The 25 metrics, moreover, track routine care and standardized outcomes; complex, individualized treatment courses are ill-represented. ACOs can therefore game the system by pursuing high scores while stinting on complex, high-cost care. Proliferating bundled-payment schemes multiply the possibilities for such gamesmanship, by rewarding providers for hitting cost and quality targets. The VA and NHS scandals underscore how such targets can misdirect us.

Outcome and process metrics that more broadly reflect what clinicians do can shrink the space for gamesmanship. But open discussion of how to make real cost–quality trade-offs is essential to stopping the progression from impossibility to the breakdown of professionalism and compassion — a progression that leads to scandal.